Short term vs Long term taxes on crypto
I have 0.5btc on exchange(bought couple of years back) which I moved to my hardware wallet last month and if I plan to sell my btc later this month I have to move my btc to exchange. In this scenario I will have to pay short term taxes (because I moved my btc from hardware wallet to exchange) or I will have to pay long term taxes(because I own it for more than couple of years now) Thanks in advance
It’s as grey as it gets. If you bought it via a exchange and selling on the same exchange. There ideally will be a log of buy and sell. That should help you figure out how much you gained. And if it’s short term or long term. Yes if you don’t have a buy price for btc in your logs. You have to pay tax on full price.
Thank you
Moving btc between wallets(exchange or hardware) is not taxable event. It's LTCG as you hold btc for more than 1 year. Exchange probably send u 1099-k with zero cost basis. When u report tax, just change the cost basis based on your true cost price.
Sadly it is. Even if it’s not taxable, you have to report it. Check out new announcement from IRS. If a crypto is not exchanged into fiat it should not be taxed , I don’t understand the logic but anyhow best of luck OP
What new announcement?
You pay a long term capital gain on a diff between sale price and purchase price. It does not matter how you moved it
In that case, can someone buy a coin, send it to me and if I sell, I pay taxes on full price of the coin?
Yes, if you don’t have the proof of purchase you should pay taxes on a full price. They made bitcoin an asset, not money. So bitcoin is closer to a house than money for IRS.